Jim Cramer Blog

Major market indices battle to finish in the black, but not by much. The Dow ($INDU) ended the session with a gain of 4.57 points to 12,666.31. The S&P 500 ($SPX) added just 1.01 points to 1,448.00. The NASDAQ ($COMPQ) was virtually flat, up just 0.89 points to close at 2,471.49. Volume was moderate with the NYSE trading 1.47 billion shares and the Naz turning over 2.15 billion. Market breadth was positive by a 21-to-12 and 17-to-13 ratio on the Big Board and Naz respectively.A lack of economic news and a slowdown in earnings data has create lethargy for stocks. This makes sense given the strength in stocks last week. The fact is that a correction is due, but with so much liquidity, buying occurs on every dip. Today’s move off the session lows occurred as oil prices fell off resistance at $60 a barrel. Crude has been on the rise, but this resistance has held to date. Nonetheless, if this area is broken it could give traders a reason to sell. Overall, crude prices rose just 14-cents on the session to close at $58.88. Oil giant BP (BP) saw its shares drop 0.8 percent after the firm reported that profits fell 22 percent in the quarter. The company also lowered guidance going forward. BP is one of the Big Three oil companies, but its results were the worst of the three with Exxon Mobile (XOM) and Chevron (CVX) seeing a drop in results, but not to the extent BP saw. The chip sector saw weakness Tuesday after National Semiconductor (NSM) lowered its outlook for the third quarter. NSM sees revenue falling by 15 percent in the quarter from the second quarter on lower shipments. As a result, the stock fell 2.7 percent to close at $22.68. Overall, the Philly Semiconductor Index ($SOX) fell half a percent on the session. One of the largest movers on the session was Globalstar Inc (GSAT). This stock fell 28.2 percent after it was downgrade due to a regulatory filing that stated the company was having problems with several of its satellites. Another large mover was Overstock.com (OSTK), which gained 22.1 percent on the session. Ironically, the discount retailer had such a bad quarter that analyst’s feel it has bottomed and can only get better from here. After the bell, Cisco (CSCO) reported better than expected earnings on a 40 percent rise in profits. The networking giant saw its shares fall 0.8 percent in the regular session, but they are up nearly five percent after hours. This should set up a strong opening for tech sector on Wednesday.
Jody Osborne

Labels: BP, CSCO, CVX, GSAT, NSM, OSTK, SOX, XOM

Stocks suffer ahead of busy week for earnings announcements. The Dow ($INDU) closed with a loss of 88.37 points to 12,477.16. The S&P 500 ($SPX) fell 7.55 points to 1,422.95. The NASDAQ ($COMPQ) gave up 20.24 points to close at 2,431.07. Volume fell off from last week with the NYSE trading 1.49 billion shares and the Naz turning over 193 billion shares. Market breadth was negative by a 12-to-21 and 11-to-20 ratio on the Big Board and Naz respectively.The Dow was down triple digits at one point this morning and just six stocks on the index were able to finish with gains. Boeing (BA) itself accounted for 24 points on the Dow with the aerospace giant down 3.42 percent on the session. BA shares were downgraded at Wachovia Securities on concerns about delays on its first delivery of 787 Dreamliners and the fact the latest commercial aircraft order cycle has reached its peak. In the past 12-months, BA shares have tacked on 33 percent. Shares of Intel (INTC) closed flat on the session after the chip giant closed a deal with Sun Microsystems (SUNW) that will have the company using Intel chips. SUNW shares fell 0.3 percent and rival Advanced Micro Devices (AMD) fell 1.1 percent. Overall, the Philly Semiconductor Index ($SOX) gave up 1.01 percent to 452.23. In the biotech sector, shares of Pfizer (PFE) fell 1.0 percent after the company released earnings this morning. The drug maker plans on cutting 10,000 jobs by the end of 2008 and bested earnings expectations by a penny a share. However, earnings did fall on an adjusted basis from the year ago period. Oil prices were volatile Monday, which happed to be the last trading day for the February contract. Crude moved above $53 a barrel in early action, but ultimately closed with a loss of 86-cents to $51.13. The March contract fell 82-cents to finish the session at $52.58 a barrel. Though expectations are for colder weather across most the U.S., analysts still believe supply levels will rise. After the bell, Texas Instruments (TXN) announced earnings that bested estimates. The company made 45-cents a share, 5-cents higher than the year ago period and easily surpassing expectations for 38-cents. The chip maker also announced plans to cut 500 jobs due to weaker demand. This news has pushed the stock higher in after-hours trading by nearly two percent after gaining 0.70 percent in the regular session. Jody Osborne

Labels: AMD, BA, INTC, pfe, SOX, SUNW, TXN

Major market indices close in the red following slew of economic data and drop in shares of Intel (INTC). The Dow ($INDU) closed with a loss of 5.44 points to 12,577.15. The S&P 500 ($SPX) fell 1.28 points to 1,430.62. The NASDAQ ($COMPQ) gave up 18.36 points to close at 2,479.42. Volume was solid with the NYSE trading 1.52 billion shares and the Naz turning over 2.32 billion shares. Market breadth was positive on the Big Board by a 17-to-15 margin, but negative on the Naz by a 13-to-17 ratio.Intel shares took a toll on the Dow and Naz with the chip giant seeing its shares fall 5.65 percent. This accounted for more than 10 points on the Dow. Intel released earnings last night that were mostly in line with expectations, but the fact that profits fell 39 percent and the company warned that gross margins in 2007 would be flat, really hurt the stock. This news follows Advanced Micro Devices (AMD) warning last week, yet the Philly Semiconductor Index ($SOX) fell just 0.81 percent. The economy was a factor Wednesday as well with data on producer prices and the Fed Beige Book released. The PPI rose 0.9 percent, which was well above the 0.5 percent expected. However, the core rate, which excludes food and energy prices, rose just 0.2 percent, though this too was above estimates. Nonetheless, the core rate is now up 2.0 percent, which will raise the attention the Fed gives it going forward. However, the consumer price index [CPI] due out tomorrow will get a lot more attention. The Fed Beige Book showed that the economy continues to see moderate growth. However, there seems to be a tightening labor market that could result in wage inflation pressures down the road. The overall feeling is that the economy is growing, albeit slowly, and inflation pressures are residing. This is good news for stocks as the data should keep the Fed on hold for the near term. Nonetheless, traders would always like to see lower rates, but this doesn’t seem likely in the first quarter of 2007.Shares of Apple (AAPL) fell 2.2 percent Wednesday ahead of the company’s earnings release after the bell. However, the stock is up nearly four percent after hours on a very positive release. The maker of Mac computers and the very popular iPod player announced that it mad $1 billion in the fourth-quarter 2006. This was a 78 percent rise with revenues coming in at $7.1 billion. Both figures easily bested estimates and the stock is seeing gains which are taking it to new all-time highs.
Jody Osborne

Labels: AAPL, AMD, INTC, SOX, SPX

Major market indices see mixed results Tuesday to start a busy week of economic and earnings news. The Dow ($INDU) closed with an advance of 26.51 points to 12,582.59. The S&P 500 ($SPX) added 1.17 points to 1,431.90. The NASDAQ ($COMPQ) experienced a loss of 5.04 points to close at 2,497.78. Volume was solid with the NYSE trading 1.51 billion shares and the Naz turning over 2.18 billion shares. Market breadth was flat on the Big Board and negative on the Naz by a 14-to-16 margin.Though the Dow was able to close at another record high, tech stocks fell on a disappointing earnings announcement from Symantec (SYMC) and downgrades of several key tech stocks. Shares of SYMC fell 13.1 percent on the session after the security software maker warned that both fiscal Q3 and Q4 earnings would fall short of estimates. Last week, Advanced Micro Device (AMD) and this led to a sharp decline for AMD shares as well.Shares of Cisco (CSCO) fell 3.0 percent Tuesday after being downgraded at both Banc of America and Prudential. Novellus (NVLS) and KLA-Tencor (KLAC) were also downgrade this morning, leaving these two stocks down 1.53 percent and 2.80 percent respectively. The Philly Semiconductor Index ($SOX), which both NVLS and KLAC are part of, fell 1.23 percent. Chip giant Intel (INTC) rose 0.77 percent Tuesday ahead of its earnings report after the bell. However, despite beating earnings and revenue expectations, INTC shares are down three percent in after-hours trading. The company stated, much like AMD, that a price war to garner market share did hurt overall results, which saw profits fall to $1.5 billion from $2.45 billion in the year ago period. Oil prices continued to be in the spotlight Tuesday with crude falling to a 20-month low of $50.55 intraday and closing at $51.21. Saudi Arabia Oil Minister Ali al-Naimi told reporters at a conference in India that OPEC did not need to hold a special meeting to cut output again. Mr. al-Naimi believes that the oil market is in much better condition than it was back in October. There is a cut that was announced in December that is supposed to cut another 500,000 barrels a day starting in February. However, there is a lot of debate whether OPEC has much control over the member nations and this has kept oil prices to the downside. There also was some concern today after the release of the Empire State Index. This index measures manufacturing activity in the New York area. However, after hitting a level above 20 last month, this index fell below 10 in a surprise move. This keeps economists concerned about the strength of the economy, although most analysts believe the weak manufacturing sector will not push the economy into a recession or create a hard landing.
Jody Osborne

Labels: AMD, CSCO, INTC, KLAC, NVLS, SOX, SYMC

Another day of gains for stocks heading into a three-day weekend. The Dow ($INDU) closed with an advance of 41.10 points to 12,556.08. The S&P 500 ($SPX) added 6.91 points to 1,430.73. The NASDAQ ($COMPQ) tacked on 17.97 points to close at 2,502.82. Volume was solid with the NYSE trading 1.53 billion shares and the Naz turning over 2.16 billion shares. Market breadth was positive by a 22-to-11 and 19-to-11 margin on the Big Board and the Naz respectively.Stocks battled back from some early weakness Friday to close with solid gains. The Dow, once again, reached an all-time high and the Naz was able to break above the 2,500 mark. Early on, an earnings warning from Advanced Micro Devices (AMD) put pressure on tech stocks, but a better than expected retail sales report helped encourage traders to buy.AMD, the major rival to Intel (INTC), warned last night that lower average selling prices for microprocessors would hurt profits in the fourth-quarter. This news resulted in a number of analyst downgrades and AMD shares took a hit of 9.5 percent on the session. Overall, the news impacted the chip sector, yet the Philly Semiconductor Index ($SOX) closed flat Friday. Most the focus Friday centered on numerous economic reports with the retail sales data getting most the attention. In December, retail sales rose 0.9 percent, 3 tenths higher than expectations. Sales less autos came in at 1.0 percent growth, double estimates. This is the second straight month of solid retail sales growth and this has convinced most analysts that the economy will experience a soft landing. The concern in the report is that growth is occurring faster than expected and this could create a more hawkish Fed. Recent speeches from Fed Presidents have shown that they are still more concerned about inflation and today’s data shows why. Now that traders can quit worrying about a Fed rate cut, they can focus on the strength in the economy and corporate profits, which should benefit stocks. Oil prices battled back today, gaining more than a dollar a barrel. Nonetheless crude sits at $53, well below the $65 price we saw just a month ago. There is talk that oil producers and OPEC are trying to figure ways to put a floor under oil prices. The fact is that OPEC can suggest production cuts, but cartel members just aren’t following these requests. Remember, Monday is the Martin Luther King Jr. holiday and this means the stock markets will be closed. This gives traders time to get ready for the rash of earnings reports that will start to pour out starting next week.
Jody Osborne

Labels: AMD, INDU, INTC, SOX, SPX

Markets see little net movement Friday as warning from AMD (AMD) slows gains for tech stocks. The Nasdaq ($COMPQ) hit a six-year high on Thursday with positive analyst comments creating optimism for the sector. However, AMD’s warning has taken a toll on the chip sector and has the Naz trading near the flat line. The stronger than expected retail sales data shows that the economy is not slowing like some had feared, but also all but assures the Fed is not going to cut rates anytime soon.Advanced Micro Devices, the leading competitor to Intel (INTC), warned last night that lower selling prices for its chips have taken a toll on fourth quarter results. The company did state that unit sales were up sharply, but incomes suffered as a result of average prices that were much lower. This news led to several downgrades of the stock and this has pushed AMD shares lower by more than 10 percent. The Philly Semiconductor Index ($SOX) is down nearly one percent, as is AMD’s rival INTC. In other tech news, shares of Apple (AAPL) are seeing further losses today. The stock rallied sharply Tuesday and Wednesday on the release of its new iPhone product. However, a lawsuit from Cisco (CSCO) over the trademark of the term “iPhone” hurt the stock on Thursday. Today, AAPL shares are down more than two percent on reports that U.S. authorities are investigating backdated stock options grants that were award to CEO Steve Jobs. Concerns about stock option granting were alleviated last week when the company stated that Mr. Jobs new about the problem with stock option granting, but didn’t benefit from it. Retail sales for December rose 0.9 percent overall and 1.0 percent when autos are excluded. This was much stronger than estimates and the gains were broad-based. On a year on year basis, sales were up 5.4 percent, which was stronger than the 4.9 percent seen in November. This data will surely boost GDP growth in the fourth-quarter and virtually wipes out any chance of a Fed rate cut in the first-quarter. Of course, things can change, but the economy definitely doesn’t seem in risk of a rough landing as it stands now. Though the bulls had a tough time getting things going in 2007, Thursday’s session saw the Dow ($INDU) close at an all-time high and the Naz at a six-year high. Yes, the Fed is still focused on inflation, but as long as the FOMC stays on hold, it seems likely the economy will continue to growth at a moderate pace and that stocks should see continued gains.
Jody Osborne

Labels: AAPL, AMD, CSCO, INDU, INTC, SOX

Only two trading days remain in the year and, in the absence of any market nosedives between now and Friday, bulls will probably be pleased with the stock market’s performance in 2006. The S&P 500 Index ($SPX) has added a respectable 14.3%, the Dow Jones Industrial Average ($INDU) is up 16.74% to record highs, and the NASDAQ ($COMPQ) is up 10.24%.The gains aren’t limited to the large cap stocks of the Dow, S&P 500, or NASDAQ. The Russell 2000 Small Cap Index ($RUT) gained 18.5% and the S&P MidCap Index ($MID) rose more than 10%. In addition, nearly every sector of the market moved higher as well. Steel stocks were among the best gainers. Investor appetite for steel companies rose amid merger hopes and better pricing for the metal. So, despite concerns about slowing demand from autos and housing, stocks like AK Steel (AKS) and Chaparral Steel (CHAP) surged more than 100%. The SIG Steel Producers Index ($STQ) is up nearly 50% on the year. Tech stocks traded mostly higher. Computer stocks led the sector in 2006. The GSTI Computer Index ($GHA) surged 31.65% since December 31, 2005. Internet and software stocks also did well. However, semiconductors did not. The PHLX Semiconductor Index ($SOX) is off 2% and, at 469.97; the chip index is below its 2003 closing value of 508.21 The Dogs of the Dow ($MUT) made a comeback. The investment strategy, which involves buying the ten Dow stocks with the highest dividend yields at the beginning of the year, delivered a 27% return so far in 2006. The advance follows an 8.85% decline in 2005. Energy stocks continued their dominant performance. The Select Sector Energy Fund (XLE), which holds all of the energy-related stocks from within the S&P 500 Index, is up 18%. The gains add to a 23.4% advance in 03, a 31.8% rally in 04, and a 38.5% surge last year. Major oil companies led the rally. The AMEX Oil Index ($XOI) is up 21.4%. Meanwhile, the AMEX Natural Gas Index ($XNG) has added 12.53% and the PHLX Oil Service Index ($OSX) gained 11.1%.Brokers and banks helped lift the financials. The Select Sector Financial Fund (XLF) rallied 17.21%. Commodity-related stocks, consumer staples, retailers, and cyclicals also beat the S&P 500 Index. Utilities, airlines, and gold mining stocks also did well in 2006.
By Frederic Ruffy, Optionetics.com

Labels: AKS, CHAP, GHA, MUT, OSX, SOX, STQ, XLE, XLF, XNG, XOI